Loonie tunes: Canadian dollar looks vulnerable
STOXX 600 down 0.2%
Healthcare lags
GSK, Sanofi fall on RFK Jr. nomination
Wall St futures lower
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LOONIE TUNES: CANADIAN DOLLAR LOOKS VULNERABLE
The FX story of the past week has all been about dollar strength, but it's worth keeping an eye on its Canadian neighbour, which had held up much better than the rest, and is now looking shaky.
The euro EURCAD= has fallen 2% on the Canadian dollar so far in November - early days, but this would be its biggest monthly drop since May 2023 - while the pound GBPCAD= has fallen 1%.
To be sure, the U.S. dollar is at its highest in over four years on the loonie, but still, given the weakness in the Canadian economy, and that the Bank of Canada has cut rates by 125 bps already this cycle, the outperformance on the crosses is notable.
"Markets have been inclined to trade the Canadian dollar as 'dollar-lite'," said Nick Rees, FX analyst at Monex Europe.
However, he says he thinks this is overdone and ripe for a reversal, given the risk of trade frictions between Canada and the United States under a Donald Trump presidency, as well as the broad economic weakness.
(Alun John)
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